U.S. government regulation of social media platforms could end up hurting small businesses and the U.S. economy, "Shark Tank" investor Kevin O'Leary warned on Tuesday.
"All of these businesses that are sitting at $5 million to $10 million in sales can't live or acquire customers without social media platforms," the chairman of O'Shares Investments told CNBC's "Squawk Box." "If you can't acquire customers on social media and you're selling garments or leg warmers, you're screwed."
"My warning to the regulators is don't kill the 'golden goose' of the efficiency this provides to small business and job creation," O'Leary said, arguing the U.S. doesn't want to become like Europe where the tech industry is not nearly big because of the much tougher regulation regime.
American lawmakers are considering possible ways to police tech companies after Facebook came under fire over its privacy practices in the wake of revelations that Cambridge Analytica improperly gained access to data from some 87 million user profiles, and then used it to target political ads.
During testimony before Congress earlier this month, Facebook co-founder and CEO Mark Zuckerberg walked a fine line showing that he was open to regulations but nothing that would fundamentally blow apart Facebook's business model. COO Sheryl Sandberg told NBC News that users could have to pay to completely opt out of their data being used to target them with advertising.
"I'm such a believer that the market will take care of the issues around security and data," said O'Leary. "I've also come to the conclusion ... no one gives a 'bleep' about this issue in the new economy."
O'Leary, known as "Mr. Wonderful" on "Shark Tank," made his initial fortune by selling The Learning Company, a venture first called Softkey that he started in his basement, to Mattel for $4 billion.
However, not everyone on Wall Street believes Facebook's problems will go away anytime soon. Billionaire investor Jeffrey Gundlach said Monday he sees Facebook falling as public perceptions of the company change.
— Disclosure: CNBC owns the exclusive off-network cable rights to "Shark Tank," which features Kevin O'Leary.